Proposed cigarette tax hike could be boon and burden to smoke shops

November 06, 2012|By Andy Grimm, Chicago Tribune reporter

Ali Al Meshal, manager of Border Tobacco, estimates 80 percent of his customers come from north of the Cook County line, some of them driving more than 20 miles to smoke Camels from his shop, located on the south side of 183rd Street in Tinley Park, just over the line between Cook and Will County. (Andy Grimm, Chicago Tribune)

Ali Al Meshal realizes he is in a unique position as Cook County Board members weigh a budget that includes a cigarette tax that will boost the price of a pack of smokes up by a dollar.

Specifically, his position is manager of Border Tobacco, located on the south side of 183rd Street in Tinley Park — just over the line between Cook and Will County.

With Cook County Board members weighing a budget package that includes a $1 per-pack increase to the cigarette tax, the price of a pack of smokes could be north of $10, and that means there is no better place to own a smoke shop than south of 183rd.

"That's why we're here. In 1997, I worked at Tobacco House (a smoke shop in the same mall) and there was no one else here. We almost closed," said Al Meshal as he greeted a steady stream of customers on a recent afternoon.

When Cook County raised cigarette taxes in 2006, that changed, and competition moved in, Al Meshal said. Al Meshal estimates 80 percent of his customers come from north of the Cook County line, some of them driving more than 20 miles to smoke Camels from his shop.

A mile north of the county line, the situation gets more dire, insists Dave Eddy, owner of Eddy's Food & Liquor on 159th Street in Oak Forest.

Business at Eddy's took a dive in 2006 after the tax increase, he said. When customers come into the shop, Eddy gives them the number for County Board Commissioner Joan Patricia Murphy, whose 6th District touches Will County and the state line.

"Why does Cook County want to raise taxes? They are losing business," Eddy said. "Will County is about a mile from my store. Indiana is about 10 miles.

"I don't know if we're going to be able to stay open. People come in one time, they see how much things cost, and they don't come back."

Cook County cigarettes are among the most expensive in the nation, with a net tax per pack of $3.98 that would go to $4.98 if County Board members agree to another $1 hike called for in President Toni Preckwinkle's latest budge proposal.

Smokers in Chicago pay an additional city tax of 68 cents, a total tax of $4.66 per pack that is the second-highest total tax on smokes in the country, behind the $5.85 paid by New York City smokers.

Cook County officials note that tax revenue from cigarette sales has dropped since the 2006 tax increase. some of that decrease is due to classic "tax avoidance" such as smokers crossing county and state lines seeking cheaper cigarettes, said University of Illinois-Chicago health economist Frank Chaloupka.

But more important to the revenue decline was the passage of a smoking ban in Chicago and other public health initiatives that have reduced the number of smokers, Chaloupka said, noting that statewide tax revenues have climbed following tax increases despite fewer cigarettes being sold.

Raising the cost of cigarettes is an effective way of getting adults to quit smoking and has an even more powerful effect on reducing the number of teens who take up the habit, Chaloupka said.

While Al Meshal says he has seen smokers take their business elsewhere to avoid taxes, he isn't expecting a windfall if the tax hike passes in Cook County. The state this summer added a $1-per-pack tax that prompted many of his customers to trek a few miles east across the state line to Indiana.

"Now, people only buy one pack, two packs, for emergencies," he said. "The rest of the time, they are going to Indiana to buy cases."